Electronic Commerce & Agents

Frank Dignum
Utrecht University
dignum@cs.uu.nl
Overview
Historical overview
Definition of Electronic Commerce (EC)
Examples of EC
Electronic markets and auctions
Agents
The role(s) of agents in EC
Conclusions
Historical perspective
(Big) calculators
Central databases
distributed information and word processing
client/server connected databases
support of (administrative) internal
processes (WFMS)
Historical perspective
Support of internal communication
(groupware)
Knowledge management
Support of external communication
(Internet & WWW)
Support of external processes (Electronic
commerce)
Definition (?)
Electronic Commerce is:

Any form of business transaction in which the
parties interact electronically rather than by
physical exchanges or direct physical
contact
Commerce
Information
exchange
Product/service/ exchange
Information exchange
Partner/product search
negotiation, market, auction
contract
contract fulfilment (directives)
legal information
etc.
Product/service exchange
(micro-)payment
(intangible) product
logistics of products and services
subscription mechanisms
Stages of Business Transactions
Information stage Negotiation stage Fulfillment stage Satisfaction stage
Business Transaction
Stages
Support for stages
Information stage Negotiation stage Fulfillment stage Satisfaction stage
-Trade relations
-Chambers of
commerce
-product and
company data
bases
(e.g. Dun &
Bradstreet)
-WWW
- EDI-translators
- Standards
(e.g. EDIFACT,
ANSI X.12)
-TradeCard
-SET (Secure
electronic trading)
-WWW
-e-mail
Business Transaction
Trusted Third Parties
Stages
Support
for
stages
12/22
business
business
Consumer Public agencies


EC Applications
Supply chain management
Home shopping
Remote banking
On-line marketing and advertising
Distant learning
Procurement and purchasing
Video on demand
Examples of EC (B-C)
Retail
Internet bookshop
CDNow
Shopping malls
Auctions
Collective buying
Item watching at e-bay now
Examples of EC (B-C)
Finance
ESI (stock market)
Electronic banking
Publishing
Examples of EC (B-B)
Business to business support
Maxtrad (business information)
MEMO (Mediating and Monitoring EC)
Secure contracts (ICC)
Bolero (electronic document support)
Markets
Automotive industry (collective buying)
Retail world
Insurance private exchange of virtual products

Role of institutions
Facilitate the transactions
Provide efficient price discovery mechanism
Provide standard transaction protocols
Provide settlement mechanisms
Enhance trust through
Provision of info on potential partners
Legal provisions to back up contracts
Provide securities/guarantees
Provide regulations on behaviour during transactions
and means to enforce them
Infrastructure for electronic markets
Banking facilities
Communication
confidentiality
integrity
authentication
non-repudiation
Transfer and storage of products
Advertising
Banking facilities
Different payment methods should be
supported
Payment should be safe
Payment and delivery guaranteed
Communication
Some common language should be used.
Constructs in the language should have a
precise and formal meaning.
Note: currencies should be clear
Contracts should be legally binding.
Obligations should be visible
Storage and transfer of goods
Physical products can be sold only once.
Their digital representation can easily be
copied and sold more than once.
Downloading of digital products should be
possible.
Transport should be arranged for other
products.
Advertisement
How is advertisement arranged?
Blackboard?
Shopping mall?
One-on-one advertisement allowed?
Format of advertisements?
Payed advertisements?
Who can advertise?
Types of markets
Direct transactions
shopping mall
classified ads
direct negotiation
Brokered transactions
distributors
brokers
auctions
Types of markets II
Direct transactions
direct contact buyer and seller
less structured transactions
influence market (institution) smaller
Brokered transactions
controlled contact between buyer and seller
transaction protocol very strict
institution has total control
Auctions
Only negotiate about price.
Fixed:
product specification
payment method
transport
delivery terms
etc.
Auctions
Sealed auctions
First priced sealed bid
Vickrey
Sealed double auction
Open auctions
Dutch auction
English auction
First price sealed bid
Rules (protocol):
Bidders submit a single sealed bid before
deadline
Outcome:
Winner is highest bid at bid price
Optimal strategy:
Bid just below private value of item
With N bidders bid: v(N-1)/N
Vickrey
Rules (protocol):
Bidders submit a single sealed bid before
deadline
Outcome:
Winner is highest bid at second highest price
Optimal strategy:
Bid private value of item
Sealed double auction
Rules (protocol):
Bidders and sellers submit a single sealed bid
before deadline
Outcome:
Auctioneer determines a single market-clearing
price and matches buyers and sellers
Optimal strategy:
Bid private value of item
Dutch auction
Rules (protocol):
Auctioneer calls out descending price.
Bidder calls out a bid
Outcome:
Winner is first bidder to call out at price bid
Optimal strategy:
Bid just below private value of item
English auction
Rules (protocol):
Bidders successively raise bid for item until one
bidder remains
Outcome:
Winner is last bidder remaining at price of
second-highest bidder
Optimal strategy:
Bid until private value of item, then drop out
Non-private value auctions
Value of item depends at least partly on the
value others give it.
Resellable products (tasks)
treasury bills
Strategy now also depends on expectation
or knowledge of the value others give the
product.
Other issues on auctions
Bidder collusion
Lying auctioneer
Interrelated auctions
Examples of auctions
http://www.wehkamp.nl/Veiling/
http://www.ebay.com/aw/
http://www.onsale.com/
http://www.band-x.com/
http://www.auctionconnect.lycos.com/
Technologies in EC
EDI
WWW
Multimedia
Work Flow Management
Agents
Electronic payment, smart cards, etc.
...
Agents
Agent properties:
autonomous
pro-active
reactive
social ability
learning
Agent functions:
information gathering and filtering
negotiation (simple like auction or ContractNet)
monitor long-term processes
Agents and electronic commerce
Agents for support:
information gathering and comparison (e.g.
shopbots: firefly)
logistics
Agents as delegates:
only when trust is not important or easy
Price and risk are low
Process well defined
Agent operated markets
http://auction.eecs.umich.edu/
http://www.iiia.csic.es/Projects/fishmarket/
Stock market
Power trade

Agents for negotiation
Limited use due to complexity, but
Very useful for e.g. auctions with:
Simple world model
Predetermined interactions
Fixed rules
One shot relations
centralised infrastructure

Agents for negotiation
Fully automated AMEC first in situations where:
1. Interactions are fast
2. Interactions are repeated
3. Trade is of relative small value
4. Process is repeated over long periods
5. Products are easy to specify

Examples: stock trade, power trade and telecom

Item watching at e-bay now
Item watching with agents
Agent watches auctions in which you are
interested
Agent warns when your bid is overturned
Agent warns when it gets interesting to start
bidding
Agent bid (strategically) up till a predefined
level
Conclusions
EC contains many, different aspects
EC is per definition multi-disciplinary
Agents can support in information seeking
phase (now already)
Agents play a role in transactions when
these are well defined and the need for
speed or monitoring is high
Vraag
1. Als ik mijn auto wil verkopen, kan ik hem dan
beter op een Engelse veiling (boden lopen op) of
een Nederlandse veiling (veilingmeester laat
prijs dalen) aanbieden? Geef aan waarom.

2. Wat zou een agent op een Nederlandse veiling
van bv. bloemen kunnen leren, waardoor hij in
de loop van een ochtend beter gaat bieden?
Welke informatie moet hij hiervoor bijhouden?